In September last year, Labor announced two main policies aimed at increasing the amount that women have in super.
BDO partner Mark Wilkinson said that one of Labor’s policies is to pay superannuation guarantee contributions to women while they are on government-paid maternity leave.
The other main policy is to remove the $450 minimum monthly income threshold for eligibility for the superannuation guarantee (SG).
Mr Wilkinson explained that at the moment, if someone is earning less than $450 a month from an employer, then they don’t have to pay SG contributions on that.
“As a lot of women work casually in multiple jobs, they might have a series of employment positions where they’re earning $449 a month, but they’re still not getting any super on that, and so, I guess, those changes are beneficial for increasing women’s super,” he said.
Labor also wants to drop the Coalition’s catch-up contributions measure which enables members to use their unused concessional contributions cap space on a five-year rolling basis where their total superannuation balance is less than $500,000.
Mr Wilkinson said that he is concerned that Labor is planning to repeal changes that are already now law, and could potentially have far greater impact on the shortfall in women’s super.
“A lot of women have balances less than $500,000 and they can use those catch-up contributions where they receive an inheritance, a windfall gain, a gift from their partner or when they return to the workforce,” Mr Wilkinson said.
This may provide her the opportunity to top up her superannuation and return herself to a position of her male counterpart, he explained.
“There is no other piece of legislation that facilitates that anywhere else in the Labor Party policy announcements. I suspect that the Labor Party feels that by allowing the catch-up, it’s only the rich that are going to take advantage of it, but I think that misses the point as well,” he said.
“If the annual concessional contribution limit is $25,000, and we know that certain groups of society are leaving the workforce in order to provide care to children and ageing parents, then why wouldn’t you allow legislation to remain in place to enable them to take advantage of the ability to catch up, and if it’s only some women who can do it, then so be it, it’s better than removing the ability to be able to do it at all.”
He also noted that the net revenue cost of funding SG contributions on parental leave is $400 million over a 10-year period.
“The benefit that they get of removing excess franking credits is $11.6 billion over four years, so $400 million over a 10-year period is not a great deal of money to be putting into additional super for women. It’s really tinkering at the edges,” he said.
As much as I disagree with removing this policy I can’t see that the CC catch up will ever be used by the low income people it is purported to target. Simply because if you are genuinely low income you don’t have capacity to make extra contributions. If you are forced to decide between contributing to super and putting food on the table then the outcome is pre-determined.
What it will most likely benefit is low income earners (predominately women) in high income households. Now there will be some instances of windfall gains, but by and large it is going to be for people that are already wealthy outside of the superannuation system.
The CCs catch up is a needless complication.
Better to re-instate a higher CCs cap for those age 50 and over.
This just proves how Labour have totally lost the plot when it comes to Superannuation and trying to save for retirement.
Politicians like to divide and conquer – employers against employees, women against men. It’s all about money. While they fighting, Treasury sneaks in and picks everyone’s pockets as they don’t notice. Women’s super benefits are low because Treasury refuses to recognise income sharing within families. You can’t talk about superannuation without looking at survivors’ benefits.